I Want You to Want Me

Hard Rock's initial data-gathering stage was crucial for internal buy-in. Matlock recalls hours spent on the phone to various franchise owners, cajoling and selling the project. They understood the reasons for the revamp: Customers want a seamless experience across multiple locations. But for many franchise partners, technology upgrades—usually with the point-of-sale (POS) system—were necessary. “The challenge becomes, ‘What skin is corporate going to ask of you as a partner?'” says Hard Rock International's CMO Galloway. “There's a financial commitment they have to make.”

In fact, financial commitments toward CRM and loyalty expenditures have become increasingly expected among restaurant franchisees. Traditionally, these programs have been part of a discretionary fee for franchise owners, notes Johnson of Loyalty 360. “Now they're making investments in CRM and technology as required spend rather than discretionary,” he says.

Hard Rock, however, didn't want to force the issue. “Everyone got to be heard,” Matlock recalls. “We addressed every concern that people raised…. Many [franchise owners] didn't understand the [loyalty] points or the financial aspect of these points. They needed help understanding the impact of the financial burden to their business, that they'd make money back. That leap of faith was the challenge.”

Along with franchise owners, she had to recruit three different heads of departments within Hard Rock: the VP of company cafés, the VP of hotel groups, and the VP of franchise cafés.

For Galloway, transparency was crucial. All three department groups, and Hard Rock corporate, would be obligated to put money into the kitty to fund the loyalty program. All would be audited and everyone would know exactly how money was being invested.

“I credit our CEO [Hamish Dodds],” Galloway says. “In the end, he told us not to stop. He said keep grinding. There were windows where we wanted to launch and had to postpone three or six months. I challenge anyone to beat us in terms of complications.”

Easy to love

Loyalty consists of three tenets: simplicity, ease of transactions, and remembering customer preferences. Consequently, customer data has become one of the most important elements of a successful loyalty program. Companies must use it to ensure that their rewards program stays profitable and enjoyable for customers. “Profiling is more important than ever, collecting attitudinal data, and not just transactional data,” says Brierley+Partners's Barnett. “Programs of today are taking this vast amount of data and insight that a customer gives you permission [to collect], to give you an experience that feels more personal.”

Moreover, Hard Rock's restaurants missed much of its tracked sales; it wasn't using data to determine where customers had the best experiences. “The challenge was to work across those complexities,” Barnett says. “Hard Rock needed a program that worked across business units. It's multinational and wanted a global voice…. [Hard Rock Rewards] was about growing the customer database and working through those complexities to increase sales and visits to its properties.”

This meant that customer information needed to be accessible at any property. Staff—whether they work in the hotel or the restaurant—need to know customer loyalty numbers and how many points each customer has available. And this involved integrating a number of disparate backend solutions, from POS to property management systems.

But as much as Hard Rock wanted to know about its customers, it was also wary about knowing too much. Given its international reach and the strictness of data privacy laws in countries such as Germany, Hard Rock worked with attorneys around the world to go through legal and tax reviews. It needed its loyalty program to be compliant among countries with more rigid privacy laws than the U.S. “We're not collecting personal, identifiable information,” Matlock says. “No security or credit card information.” The information Hard Rock retains, she says, is mostly about where customers live and how they want to be communicated with.

Employee training

Often overlooked when businesses redesign loyalty programs is the effect the changes will have with frontline employees. “You have to train your associates—servers and clerks,” Barnett says. “All of [Hard Rock's] customer-facing folks have completely embraced the program and they need to keep channeling that focus so it keeps their excitement. If those customer-facing associates are excited, they'll continue to enroll customers and keep [the loyalty program] front and center.”

However, during a recent visit to Manhattan's Hard Rock Café restaurant, employee enthusiasm varied. After my bill arrived I asked my waiter about the new rewards program. I had expected him to pitch it himself. “You sign up in the kiosk outside by the restroom or upstairs,” the waiter said.

“That's it?” I said.

“Yeah, it's all done by computer,” he said. “I don't know much about it. I don't own a computer myself. I don't even own a cell phone.”

I went upstairs to the gift shop kiosk, where I had two options: Quick Sign Up or Full Sign Up. I went with Quick.

On my way out I asked a greeter at the Hard Rock store how the new rewards program was going. “It's a work in progress,” she said. “It doesn't make as much sense as the All Access program. In All Access, $1 was worth one point. With the new program, it's 20 or something. Also, sometimes the [wait staff] doesn't always know how to explain it. And it's hard to explain to people that don't speak English.”

I asked her if she expected these issues to smooth out as the program became more established. “Yeah,” she nodded. “I think so.”

And this, ultimately, is Hard Rock's plan: build a foundation and gradually improve it as the company learns more about its customers. “There's a hunger for more insight from that data, but we had to get the base system in place first,” Matlock says.

In particular, Hard Rock is working to integrate its casinos into the program. Though Hard Rock's gaming institutions have robust databases, the technology integration and partner alignment process is more complicated; consequently, the company is targeting casinos as part of the program's next evolutionary step.

The key is that the loyalty program is finally based on real data. “We know it's working,” Matlock adds. So far, Hard Rock Rewards is on pace to get one million members by the end of the year, compared to the 715,869 over 10 years it took All Access to accrue.

“It's not perfect,” Galloway says. “It's a platform for the future. [Hard Rock Rewards] lets us connect with the Hard Rock community and communicate with them.”